In 2019, the operating income decreased by 3.74%, and the net profit increased by 39.93%.
The company released its 2019 results KuaiBao: in 2019, the company achieved operating income of 3.979 billion yuan, down 3.74% from the same period last year; realized net profit of 156 million yuan, equivalent to 0.29 yuan of fully diluted EPS, an increase of 39.93% over the same period last year; and realized net profit of 103 million yuan, an increase of 8.93% over the same period last year.
In a single quarter, the company's 4Q2019 achieved operating income of 904 million yuan, down 8.87% from the same period last year; net profit from home was 19.55 million yuan, down 38.27% from the same period last year; and 16.03 million yuan was deducted from non-return net profit, down 44.13% from the same period last year.
Investment income and interest income contribute to performance growth
In 2019, the company's revenue decreased compared with the same period last year, mainly due to the transfer of Hangzhou Zhejiang Sea, the wholly owned grandson of the company. According to the company's disclosure, if the impact of Hangzhou Zhejiang Sea transfer was deducted, the rest of the main business revenue increased by 0.53% over the same period last year. The increase in the company's return net profit is mainly due to: 1) the transfer of the company's wholly-owned grandson company Hangzhou Zhejiang recognized investment income of 16.98 million yuan; 2) collection of the previous "Hangzhou box horse market" expansion and reserve fees of 12.33 million yuan; and 3) 2019 year-on-year increase in interest income.
The growth of stores has slowed down and the level of gross profit margin has improved
The growth rate of the company's stores has slowed this year, and as of 3Q2019, there are 177 / 26 stores outside Ningbo / Ningbo, up from 5 / 4 at the end of 2018. However, with the gradual deepening of cooperation with BABA and the gradual upgrading of the format of its stores, the company's gross profit margin has improved. 3Q2019's comprehensive gross profit margin is 24.51%, which is 0.59% higher than that of 3Q2018. In the future, the improvement of gross profit margin brought about by the improvement of the company's selection ability is expected to become the driving force for the company's performance growth for a period of time.
Raise profit forecast to "overweight" rating
Although the company's revenue performance is relatively lacklustre, the increase in gross profit margin brought about by the upgrading of the business format provides a certain guarantee for future performance growth. We correspond to raise our forecast for the company's EPS in 19-21 to 0.29 / 0.23 / 0.24 yuan (previously 0.21 / 0.22 / 0.24 yuan). Taking into account the continued development of the company's innovative format and the previous correction in the company's share price, PE-TTM has been raised to "overweight" rating below the average of the past three years.
Risk Tip: cooperation with BABA new business type effect is not up to expectations, CPI growth is not up to expectations.